New mandatory delisting criteria are added to encourage multiple dividends a year...... The latest release on the Beijing Stock Exchange

The Beijing Stock Exchange has added a new trading volume delisting indicator, and the cumulative trading volume of less than 1 million shares for 120 consecutive trading days will be forcibly delisted.

In order to implement the "Several Opinions of the State Council on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market", on April 12, the Beijing Stock Exchange solicited opinions from the public on six supporting business rules, including the "Public Issuance Review Rules", "Listing Rules" and "Restructuring Review Rules", involving institutional arrangements such as public offering and listing, major asset restructuring, share reduction, dividends, and delisting.

Let's take a look at the 5 main points:

1. In order to prevent and control "sick declaration" and "clearance declaration", the interval between the sponsor institution's re-declaration after two rejections within 12 months is extended from 3 months to 6 months, and a 6-month declaration interval is added for issuers to "withdraw after inspection" and "withdraw after supervision".

2. The maximum period for disciplinary punishment for not accepting listing application documents will be increased to 2 years for violations such as obvious defects in the application documents and serious impact on investors' understanding or review and development.

3. A new trading volume delisting indicator will be added, and the cumulative trading volume of less than 1 million shares for 120 consecutive trading days will be forcibly delisted. If there are false records in the main financial indicators for three consecutive years, they will also be forcibly delisted.

4. Implement the requirements for preventing "detour reductions", requiring major shareholders to reduce their shareholdings through agreement transfer or block trading, and the transferee shall not reduce the transferred shares within 6 months of the transfer;

5. Promote the company to combine undistributed profits and current performance pre-dividends before the Spring Festival to facilitate multiple dividends within a year.

A six-month reporting interval will be added for issuers such as "withdrawal upon inspection".

The China Securities Regulatory Commission (CSRC) clearly stated in the "Opinions on Strictly Controlling the Access to Issuance and Listing and Improving the Quality of Listed Companies from the Source (Trial)" that "strictly supervise the issuance and listing activities of enterprises, tighten and consolidate the responsibilities of all parties in the whole chain of issuance supervision, and effectively establish the concept of being responsible to investors". The Beijing Stock Exchange has revised the "Public Issuance Review Rules", "Restructuring Review Rules" and "Management Rules of the Two Committees" to further consolidate the responsibilities of all parties:

The first is the reporting responsibility of the issuer. The "key minority" is required to effectively enhance the awareness of integrity, self-discipline and the rule of law, improve corporate governance and internal control systems, accept internal control audits, cooperate with intermediary verification, issuance and listing supervision, and the issuer should re-declare if it changes sponsor institutions for reasons other than the restrictions on the practice of sponsor institutions. In order to urge sponsors and issuers to pay more attention to the quality of declarations, and prevent and control "sick declarations" and "customs clearance declarations", the interval between sponsor institutions and re-declarations after two rejections within 12 months has been extended from 3 months to 6 months, and a 6-month declaration interval has been added for issuers to "withdraw after inspection" and "withdraw after supervision".

The second is the "gatekeeper" responsibility of intermediaries. Sponsors are required to proceed from the interests of investors, make full use of methods such as capital flow verification, customer and supplier penetrating verification, on-site verification, etc., to prevent financial fraud, and submit working papers for regulatory reference as required. Implement the requirements of "declaration is responsible", strengthen on-site supervision, and clarify on-site supervision as one of the main means of auditing.

The third is the main responsibility of the exchange. Further improve the relevant supporting mechanisms and enhance the exchange's ability to review and gatekeeping. For applications with obvious flaws in the quality of information disclosure, the Exchange will terminate the review in accordance with regulations. Implement the requirements that supervision should be "long teeth and thorns", with edges and corners, and strengthen the force of disciplinary punishments. Optimize the operating mechanism of the Listing Review Committee and the M&A and Restructuring Review Committee (hereinafter referred to as the "Two Committees"), and strengthen the management and supervision of the members of the "Two Committees" by the Exchange.

In terms of issuance review, the "Public Issuance Review Rules" has made key adjustments. Improve the relevant regulations on the positioning of the Beijing Stock Exchange, further adhere to the positioning of the sector, clarify that the issuer should meet the positioning requirements of the Beijing Stock Exchange, and the sponsor should verify and make professional judgments. For those that do not comply with market positioning and industrial policies, the Beijing Stock Exchange may terminate the review.

At the same time, it is clarified that the issuer shall ensure that the disclosure of relevant information accurately and truly reflects the company's operating capabilities. The maximum period for disaccepting disciplinary sanctions against listing application documents will be increased to 2 years for violations such as obvious flaws in the application documents that seriously affect investors' understanding or review of the application documents.

In addition, the deduction of the review time limit of the consulting industry advisory committee is optimized, and it is clarified that the time limit deduction is also applicable to acceptance, inquiry, suspension of deliberation, review and other links. In line with the optimization of the implementation standard for 12 consecutive months of listing, it is clarified that if an issuer suspends its review due to less than 12 consecutive months of listing before submitting it to the Listing Committee for review, the suspension period may exceed three months.

Shares with a cumulative trading volume of less than 1 million shares for 120 consecutive trading days will be forcibly delisted

The current mandatory delisting system of the Beijing Stock Exchange has set four types of standards: trading, financial, regulatory and material violations, and the revision of the Listing Rules focuses on the improvement of the delisting system, revises the four categories of delisting indicators, and simultaneously adjusts the supporting information disclosure, suspension and other arrangements.

In terms of mandatory delisting of trading stocks, a new trading volume delisting indicator has been added, and the cumulative trading volume of less than 1 million shares for 120 consecutive trading days will be forcibly delisted.

In terms of compulsory delisting of financial indicators, it is clarified that all financial indicators are cross-applied, that is, after the company is subject to the risk warning of compulsory delisting of financial categories, if it touches any of the relevant financial indicators in the first fiscal year, it will be forcibly delisted. When determining the amount of operating income, it is required to deduct business income unrelated to the main business, and the total increase in profit in the dimension of loss is negative.

In order to clear out companies that have committed large-scale fraud and have been fraudulent for many years, it is newly stipulated that if the amount of the main financial indicators disclosed by the company in any one year is more than 200 million yuan and exceeds 30% of the amount of the corresponding account disclosed in that year, or the total amount of the main financial indicators falsely recorded in the main financial indicators reaches more than 300 million yuan and exceeds 20% of the total amount of the corresponding account disclosed in the two years, or the main financial indicators have false records for three consecutive years, it will be forcibly delisted.

The Beijing Stock Exchange said that after the adjustment of the delisting system of the Beijing Stock Exchange, the overall delisting requirements are basically on par with those of the Shanghai and Shenzhen Stock Exchanges. Specifically, the standards for mandatory delisting of major violations and norms are basically the same, but there are differences in the continuous calculation time of stock transactions under the trading and financial mandatory delisting standards, the thresholds of individual indicators such as the delisting criteria for operating income, and the scope of application of market value delisting, mainly based on the adaptive adjustment of the market positioning of the Beijing Stock Exchange to serve innovative small and medium-sized enterprises.

New measures to prevent "detour reduction" have been added

The shareholding reduction system is related to the stable operation of the market and the vital interests of investors, and the "Shareholding Reduction Guidelines" have made adaptive arrangements on the basis of the overall implementation of the relevant requirements for shareholding reduction, combined with the market positioning of serving innovative small and medium-sized enterprises.

The first is to implement the requirements for preventing "detour reduction". It is added that the relevant parties continue to jointly abide by the shareholding reduction restrictions after the shareholding reduction by means of divorce, termination of legal person or unincorporated person, division, etc., and it is clarified that judicial compulsory enforcement, illegal disposal of margin financing and securities lending, and gifts continue to comply with the shareholding reduction regulations; if a major shareholder is required to reduce his or her shareholding through an agreement transfer or block transaction, the transferee shall not reduce the transferred shares within 6 months of the transfer; the major shareholder, directors, supervisors, and senior executives are prohibited from selling securities and securities lending, and the restricted shares are prohibited from being sold by securities lending.

The second is to strengthen the responsibilities of actual controllers, major shareholders, and board secretaries. The actual controllers and major shareholders of listed companies are required to implement shareholding reductions in a standardized, rational and orderly manner, and pay full attention to the interests of listed companies and small and medium-sized shareholders;

The third is to remove the process disclosure requirement. Delete the process disclosure requirement of more than half of the time and more than half of the plan, reduce the overlap with the disclosure of equity changes, and avoid problems such as duplicate disclosure and excessive disclosure of process information.

Fourth, it stipulates restrictions on transactions during sensitive periods. The sensitive period of annual reports and semi-annual reports has been changed from 30 days to 15 days, and the sensitive period of quarterly reports, performance forecasts and performance express reports has been changed from 10 days to 5 days. Remove the restriction on the sensitive period of controlling shareholders and actual controllers.

Actively promote the Beijing Stock Exchange listed companies to pay dividends multiple times within a year

In order to further strengthen the supervision of dividends of listed companies and promote listed companies to enhance their investment value. The Beijing Stock Exchange has revised the Guidelines for Equity Distribution, improved the regulatory requirements for cash dividends of listed companies, and encouraged listed companies to increase dividends and enhance investor returns.

The amendments simplify the review process for interim dividends. The requirement for the board of directors to review the equity distribution plan at the same time when deliberating the periodic report was deleted, and the company was promoted to combine undistributed profits and pre-dividends for the current performance before the Spring Festival to facilitate multiple dividends within a year. At the same time, the medium-term dividend benchmark is clarified. Interim dividends are required to be based on the latest audited undistributed profits, and reasonable consideration should be given to the current profits, so as to eliminate the market's understanding of the audit requirements for interim dividend statements.

Editor-in-charge: Wan Jianyi

Proofreading: Ran Yanqing

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